Health Care ETFs and Reform (XBI, IHF, IHI)

The Health Care Reform is now a reality and Americans can expect big changes over the next decade. But more importantly how will this legislation affect stocks in the near-term, in particular the health care sector.

Looking at the health care ETFs, there could be a mixed reaction depending on the focus of the ETF. For example the iShares Dow Jones US Health Care Provider (NYSE: IHF) could be hit hard as health care insurers fall on the news. Keep in mind that IHF closed last week at a fresh 2-year high.

I appeared on Fox Business this morning and Dr. Marc Siegel believed the biotech stocks would take a hit because the new reform does not bode well for medical innovation. The SPDR Biotech ETF (NYSE: XBI) will be one to watch this week as it also trades near a 52-week high.

Falling into a similar category as far as innovation and new products is the iShares Dow Jones Medical Devices ETF (NYSE: IHI), also trading near a high. There was talk about higher taxes on the sector a few months ago and this hurt IHI, but it has been able to recover nicely. Now the question is can it recover from the reform passing the House?

Short-term weakness for the above-mentioned ETFs could result in a buying opportunity and I will keep my eye on the sector as the situation unravels.